Even if you win the World Cup and take home a hefty prize, that doesn't mean you can just keep all of your winnings.
The Spanish national team that won the tournament received a prize worth US$51 million, but a large portion of that amount is likely to be subject to tax in the United States.
This is because the location of the match plays a role in determining tax rights.
Of the eight matches Spain played during the tournament, seven were in the United States.
Therefore, the country's tax authority, the Internal Revenue Service (IRS), can treat the majority of FIFA's winnings as income generated in the United States.
According to this method, 7/8 of the winnings or about 87.5% of the total can be classified as income sourced in the United States.
This means that around US$44.625 million of Spain's prize money could potentially be taxed in the country.
Under US tax rules, income deemed to be sourced in that country may be subject to a withholding tax of up to 30%, depending on the applicable terms and conditions.
Based on this estimate, around US$13.39 million may be withheld as withholding tax before the remaining prize money is distributed to the rightful party.
However, this amount is not a definitive figure. The actual tax payable may be lower or higher depending on a number of other factors.
These include bonus payments to players, tax reliefs that are eligible to be claimed, and various expenses incurred by the team throughout the tournament.
Therefore, while the World Cup prize money may seem very large, the amount ultimately received may not be the same as the announced prize money.
International tax systems can have a significant impact on the actual amount that the winning team takes home.
